Lowering costs while raising tariffs is key

High prices, unreliable service and inadequate supply have all contributed to Africa’s energy crisis. Speaking at the Energy Solutions for Africa Conference and Exhibition in Sandton last week, Reynold Duncan of the World Bank said solving these and other issues was imperative for the continent to move forward. “The solutions may seem very simplistic but it really comes down to finding ways and means of addressing the problems. One of the major issues is the inadequate supply and distribution of energy and the continent is going to have to look at ways developing regional power trade.” Reynold said another major factor was the high price of energy. “Many perceive energy to be quite cheap in Africa. It is not. The prices are very high and lowering costs while raising tariffs is key. It will also be necessary to improve equity by better targeting of subsidies.” According to Reynold, the unreliability of services across Africa remains a contentious issue with many major institutions and companies staying away as a result. “Most large businesses who operate from this continent run generators. In the formal sector load shedding results in lost sales revenues of between 5% and 6%, while this figure increases to 20% in the informal sector. It impacts on productivity, social services delivery and growth.” Reynold said infrastructure had the largest impact of any investment climate variable and inadequate power accounted for 40-80% of infrastructure impact. Reynolds said it was time Africa moved from a “firefighting to foresight” situation, planning ahead, engaging widely with roleplayers and became committed to political and financial reform. He said in a recent study it was found that at least 30 African countries were experiencing chronic blackouts. “The power supply on this continent affects its growth potential. It must be solved for the continent to grow.”